This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 10/10/2018

Overview

India’s energy consumption is expected to grow 4.2 percent per year for the next two decades, overtaking China as the world’s largest energy growth market before 2030. In anticipation of rising demand, the Government of India announced several energy initiatives aimed at building power generation capacity, promoting energy efficiency, and increasing clean energy sources in the overall power mix. Currently, India has an installed power generation capacity of 344 gigawatts (GW), making it the fifth largest producer in the world.  Coal continues to dominate the energy mix, but its share is declining as natural gas and renewable energy sources increase their percentage share.  

 

India's Total Installed Capacity by Power Source (GW)

Source

As of March, 2016

As of March, 2017

As of March, 2018

Percentage of Energy Mix

Coal

185.99

192.16

196.95

57%

Gas

24.50

25.33

24.89

7%

Diesel

0.91

0.84

0.83

<1%

Nuclear

5.78

6.78

6.78

2%

Hydro

42.78

44.48

45.40

13%

Renewables

45.92

57.24

69.02

20%

Total

305.88

326.83

343.85

100%

Source: Ministry of Power

Renewable Energy

In 2015, the Government of India announced plans to add 175 GW of renewable energy capacity by 2022, to include 100 GW of solar power, 60 GW of wind power, 10 GW of biomass, and five GW of small hydropower.

Renewable Energy Mix (by Source)

As of March, 2016

As of March, 2017

As of March, 2018

Target for 2022

Wind Power

26,777 MW

32,280 MW

34,046 MW

60 GW

Solar Power

6,763 MW

12,289 MW

21,651 MW

100 GW

Biomass Power

8,019 MW

8,182 MW

8,700 MW

10 GW

Small Hydro

4,273 MW

4,334 MW

4,485 MW

5 GW

Waste-to-Energy

91 MW

114 MW

138 MW

None

Total

45,924 MW

57,244 MW

69,022 MW

 

Source:  Central Electricity Authority

Overall, the U.S. market share of India’s energy-related equipment and commodities is rather low. While China leads as the top foreign competitor for low-cost equipment, India imports more equipment from Europe and Japan than the United States, which suggests that there is room to grow U.S. market share in higher value manufactured goods. Coal commodities are primarily sourced from Australia, Indonesia, and South Africa, but U.S. exports to India doubled from 2016-2017. Oil and gas commodities are sourced mainly from the Middle East, but the U.S. share is expected to grow steadily after the first crude oil shipment to India was made in November 2017.

Units: $ millions

Indian Import Data by Subsector, 2017

 

Total Imports

 

Imports from the United States

 

U.S. Market Share of Indian Imports

Renewable Energy Equipment

$ 4,781

$ 246

5%

Transmission & Distribution Equipment

$ 436

$ 18

4%

Oil & Gas Equipment

$ 4,976

$ 331

7%

Oil & Gas Commodities

$ 98,949

$ 777

<1%

Coal Commodities

$ 21,310

$ 1,254

6 %

Source:  Global Trade Atlas 

Units: $ millions

Transmission & Distribution Equipment

2015

 

2016

 

2017

 

2018 (Estimated)

 

Total Local Production

$22,500

$23,700

$26,900

$28,500

Total Exports

$5,700

$6,000

$6,500

$6,800

Total Imports

$296

$418

$436

$480

Imports from the United States

$12 (4%)

$14 (3%)

$18 (4%)

$20 (4%)

Total Market Size

$17,096

$18,118

$20,836

$22,180

Sources: Global Trade Atlas, Indian Electrical and Electronics Manufacturers Association, Directorate General of Foreign Trade 

Challenges and Barriers to Renewable Energy Exports

While many positive developments suggest growing U.S. export competitiveness in India, exporters continue to face important bureaucratic and structural challenges, which lead to longer lead times and complexities for project development.  First, exporters must often engage with a slow, often bureaucratic regulatory system that includes highly regulated electricity prices and inefficient state-owned distribution companies. Developers of all power generation technologies face the same hurdles, which can slow development and make investment decisions less attractive.

U.S. exporters, particularly those in the solar sector, continue to face sector-specific issues, including a local content regimes (LCRs) that are the most stringent of any employed globally. For example, Phase 1 of the Jawaharlal Nehru National Solar Mission (JNNSM), India’s flagship solar incentive program, banned the importation of crystalline-silicon solar cells (the ban was later extended to include modules). Phase 2 of the JNNSM, which is ongoing, reserved half of the 750 MW auction system for developers who use only Indian-made content.

On July 30, 2018, India’s Ministry of Finance announced the imposition of final duties resulting from India’s safeguard investigation on imports of solar cells whether assembled in modules or panels under HS code 85414011.  Because of this announcement, safeguard duties will be imposed in accordance with the following schedule:  25 percent ad valorem (July 30, 2018 – July 29, 2019), 20 percent ad valorem (July 30, 2019 – January 29, 2020), and 15 percent ad valorem (January 30, 2020 – July 29, 2020).  India imported approximately $4.1 billion of solar cells in 2017, of which $3.6 billion was from China, $243 million was from Malaysia, and approximately $2.3 million was from the United States.

Additionally, the wider regulatory environment and infrastructure for the renewable energy is problematic. India’s underdeveloped transmission and distribution (T&D) system remains an impediment to projects. Losses stemming from the inefficiency of T&D are estimated at nearly 17 percent of total electrical output. Another barrier towards the Indian government’s renewable energy strategy is the availability of land, a problem epitomized by the struggle to get the parliament to sign off on the Land Acquisition Bill. 

Leading Sub-Sectors

Natural Gas Infrastructure

Traditionally, India’s oil and gas sector has been dominated by public sector undertakings (PSU’s), accounting for 80 percent of domestic oil and gas production and nearly 70 percent of the refining capacity. In recent years, the GOI has taken steps to deregulate the industry and encourage greater private participation and foreign investment, which is resulting in a slow but steady growth of private sector activity.  

Over the last few years, the Indian Government has played a pivotal role in strengthening this core industrial sector.  The introduction of the New Exploration Licensing Policy (NELP) was aimed at intensifying activities in oil and gas exploration, while the government allowed 100 percent foreign direct investment (FDI) in the sector including natural gas, petroleum products, and refineries, among others. In addition, the Hydrocarbon Exploration and Licensing Policy (HELP) was launched to address several issues plaguing the oil and gas sector in India, allowing a stipulated revenue sharing model and marketing and pricing freedom for gas discoveries. 

The GOI announced plans to raise the share of natural gas in India’s energy mix from 6 percent (2016) to 15 percent by 2022. Currently, half of India’s supply of natural gas comes from domestic production while the other half comes from imported liquified natural gas (LNG), but industry experts expect rising demand will require a 30 percent domestic, 70 percent imported LNG supplier mix by 2025. Anticipating future demand, India broadened its international supplier base and negotiated long-term supplier contracts, but now faces the challenge of building up its gas infrastructure to receive LNG shipments, and distribute the gas across a wide geographical area. Currently, India has four operating LNG terminals located on its western coast, and several more coming on-line. Over 16,500 km of pipeline are in operation, with an additional 11,900 km under construction. The existing City Gas Distribution (CGD) network covers 11 percent of the India’s geography, reaching 19 percent of the population. Upcoming projects intend to expand coverage to 24 percent of India’s geography and 29 percent of the population over the next eight years.

Biofuels

India recently announced its National Biofuel Policy in May 2018. The policy aims to increase usage of biofuels in the transportation and energy sectors. On the production side, the policy intends to primarily utilize, develop, and promote domestic feedstock. On the technology side, it is open to new conversion technologies and an expanded scope of "biofuel" feedstock, to include industrial waste sources as well as agricultural sources.

The biggest market challenge for U.S. ethanol exports is India’s express prohibition for foreign-produced ethanol for fuel blending. The new National Biofuels Policy 2018 underscores this intention, which is designed to force domestic production facilities to come online quicker. While the policy upholds the restriction on foreign-produced ethanol importations for fuel blending, India still allows ethanol importation for industrial use. Demand for industrial-use ethanol is increasing as supply is increasingly diverted to the fuel industry, however, and the challenge would be to supply a landed cost at par with domestic pricing.

In 2017, U.S. exporters shipped 172.7 mi gallons (653.74 mi L) of ethanol to India. The United States is the largest foreign supplier of ethanol to India, holding over 90 percent market share of imports. However, India’s imported ethanol is only permitted for industrial use, and expressly prohibited for fuel blending.

Transmission, Distribution and Smart Grids

In India, the transmission and distribution of power is dominated by the government with the overall private sector role limited to 1 percent in transmission and 5 percent in distribution (Delhi and Odisha states; city of Mumbai, and parts of Kolkata, Ahmedabad and Surat municipalities have private companies engaged in electricity distribution). One of the largest challenges that the Indian power sector faces is transmission and distribution (T&D) losses, which are very high – 26.35 percent at distribution level and more than 8 percent at transmission level nationally. Several large states report more than 40 percent distribution losses. The Power Grid Corporation of India (PGCIL), which is the owner, operator, and developer of the national interstate power-grid says it will spend $18 billion in the next five years extending and upgrading the Indian power grid to include smart technology.

One area of potential market opportunities lies in "smart grid" technologies.  India is heavily focused on large scale grid modernization, to increase reliability and reduce black-outs, especially as additional renewable energy resources come online.  Several U.S. companies are participating in pilot projects, and currently negotiating larger utility-scale projects using technology proven in India.

Energy Storage

Despite considerable growth in the power sector, many parts of the country continue to face severe power shortages as consumption increases faster than distribution, leading to shortages and poor quality of power supply. As a result, most industries maintain diesel-powered generators and households utilize inverters with lead-acid batteries as backup systems to ensure reliability. India’s T&D entities are piloting energy storage projects at the utility-scale, to help balance and stabilize the grid, especially with the rapid integration of renewable energy sources.

India is also working on a fast track program to introduce electric vehicles to tackle its ever-growing pollution issues.  This is another area where energy storage can play a big role.  Additionally, work has begun on policies and incentives to promote the energy storage sector in India.  For example, the Ministry of New and Renewable Energy (MNRE), through the Jawaharlal Nehru National Solar Mission (JNNSM) offers a higher capital subsidy for photovoltaic systems with energy storage, than those without storage. 

Opportunities

On the commodity side, excellent opportunities exist to export crude oil, natural gas, and coal to India, which is open to explore new partnerships with U.S. suppliers. Despite the fuel-blending restriction, India’s imports of ethanol for industrial consumption are steadily climbing.

Natural gas infrastructure will be an area of opportunity for the next several years, particularly as India constructs new LNG terminals, expands pipelines across the nation, and builds out city gas distribution to include piped city gas for buildings and compressed natural gas dispensers for transportation. Opportunities also exist for partnership with the major refineries bringing ethanol production plants online, some of which will be coming out with tenders this year.

As India moves to modernize the grid system to bring stability and reliability of electrical power, demand is steady for both traditional T&D equipment, as well as "smart grid" innovations. Equipment might include transformers, fixed capacitors, fuses for electrical apparatus, lightening arrestors voltage limiters, electric conductors, microprocessors, amplifiers, electricity meters, and smart communication technology.

The Indian Energy Storage Alliance predicts that energy storage potential between now and 2025 to be 300GW. Currently, U.S. energy storage technology enjoys a global competitive advantage, but suppliers will need to enter the market soon to establish strong relationships with business partners in this quickly developing market.

U.S. companies interested in developing new business contacts in India’s rapidly expanding renewable energy sector should contact:

Ms. Renie Subin
Commercial Specialist
Tel: 91-11-23472155
renie.subin@trade.gov

Web Resources

Ministry of Power https://powermin.nic.in

Ministry of New and Renewable Energy https://mnre.gov.in/

Solar Energy Corporation of India www.seci.gov.in/

Central Electricity Authority www.cea.nic.in/

Central Electricity Regulatory Commission http://cercind.gov.in/

Indian Renewable Energy Development Agency www.ireda.in/

India Smart Grid Forum www.indiasmartgrid.org

Indian Energy Storage Alliance http://indiaesa.info/

Confederation of Indian Industry https://www.cii.in/

Federation of Indian Chambers of Commerce and Industry http://ficci.in/

Faster Adoption and Manufacturing of Electric Vehicles (FAME) https://www.fame-india.gov.in

India Brand Equity Foundation https://www.ibef.org/

National Electric Mobility Mission Plan 2020 https://dhi.nic.in/writereaddata/Content/NEMMP2020.pdf

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



India Energy Trade Development and Promotion